Investor Confidence Rises for Seventh Consecutive Month
Posted by Colin Lambert. Last updated: July 27, 2023
Investor confidence, as measured by the State Street Investor Confidence Index (ICI), rose for the seventh consecutive month in July, however it remains in negative territory, albeit grinding its way back to neutral.
The Global ICI increased to 96.2, up 0.8 points from June’s revised reading of 95.4 (originally released as 95.8). The increase was led by a 1.3 point rise in North American ICI to 90.8 as well as a 0.7 point rise in Asian ICI to 97.3. The story was more mixed in Europe, however, with European ICI dropping 5.4 points to 99.5.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets research and advisory services business. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.
“Investor confidence continued to recover towards neutral, as the Global ICI improved to its highest level since last fall,” says Marvin Loh, senior global macro strategist at State Street Global Markets. “However, overall investor tone remained defensive, with all our global and regional indicators registering a sub-100 reading.
“North America saw the greatest improvement with respect to investor sentiment, rising to its highest level in nine months as recessionary risk faded while inflation surprised to the downside,” he adds. “In contrast, the Europe ICI fell back below 100, with deteriorating data spreading across the region’s largest economies. Finally, the Asia ICI was largely unchanged as weak Chinese data prompted the government to engage in more aggressive stimulus efforts.”